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Thought Leadership

We think a lot about risk—and ways to manage it—in a variety of ways. From rising concerns to best practices to exposure assessments, we're sure you’ll find our expert insights valuable.

Featured topic: Market Updates

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Insurance market insights from Alliant Private Client leaders

The insurance market continues to evolve, making it a fitting time to address the challenges our clients may be facing. Over the years, we have found knowledge is the best way to help clients navigate uncertainty. As such, two of our senior leadership team members have come together to share their perspectives and insights on the current state of the market and what the future may bring. Challenges in the current market What worries you the most right now? Cindy Zobian, EVP, Managing Director: While the challenging market was once contained to homeowner’s insurance, auto insurance and liability, rates are now also affected. We know this has all been very difficult for our clients. It’s understandably frustrating to see rates rise and hear about carriers leaving states. Mostly, I am always thinking about ways we can guide our clients through this market as seamlessly as possible. Alliant’s response to the market challenges So, how is Alliant meeting the moment? CZ: We’ve gotten more creative, taking an even more holistic view of our insurance programs. We’re helping clients use deductibles and co-insurance to offset the hesitance in the market; high deductibles are more attractive to insurance carriers. We’re also getting multiple carriers to share the risk, minimizing the burden of any individual carrier. The role of self-insurance There’s more talk about self-insurance these days. What do you think about this option? Mark Recht, SVP:  Some clients are inquiring about this option, in which they will take on the financial risk of a possible loss instead of purchasing insurance from a carrier. We are always happy to discuss this as an approach as part of the broader risk management strategy and sometimes it is the right choice. However, ultimately most people choose to have some insurance protection because it can be difficult to reenter the insurance market once you’ve opted out. CZ: Yes, we are always going to walk clients through the good and the bad of self-insurance; in the end, we want them to be able to make the decision that is best for them. The future of the insurance market Do you see any bright spots in today’s market? CZ: We know that insurance is not the most exciting topic however, the market conditions are providing us the opportunity to have more frequent and substantive conversations with clients to develop customized programs that meet their unique needs. Clients want to understand their insurance program better, so they are better equipped to make strategic choices. And that’s a win for everyone because it leads to better overall risk management. MR: We continue to collaborate with wealth advisors and other professionals to discuss risk management because they want to ensure that their clients have risk management programs that best meet their lifestyle and unique set of needs. Understanding the complexities of the insurance market Which aspect of the market is most difficult for clients to understand? MR: The market challenges are not just impacting specific regions anymore. The current situation started in 2018 in California, after the wildfires, and then impacted Florida because of the storms. This impact is now being felt nationally, if not globally. That said, clients outside of catastrophic-prone areas are now feeling the impact of these weather-related events like ice storms, flooding, and tornadoes. Conversely, those who reside in catastrophic-prone areas do have the additional concern of carriers leaving the state, in part because some state regulations don’t allow carriers to set mutually beneficial rates. Looking ahead: The future of the insurance market What does the future look like? MR: We’re optimistic. As more reinsurance capital becomes available and insurance carriers continue to seek innovative solutions, we are finding creative ways to tackle the challenges.                 CZ: Yes, we’re going to continue to learn and evolve. Almost every day, we find additional ways to offset these challenges. As Cindy and Mark shared, now more than ever, the proper insurance strategy is essential, both for property protection and wealth management purposes. As you review your goals and priorities, please don’t hesitate to reach out to your insurance advisor for guidance on your portfolio. ...

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The impact of natural disasters on the insurance industry

With predictions of another season of significant weather events in the air, it’s important for us to give you an update on the current insurance landscape. The insurance industry is constantly evolving due to many factors and our goal is to keep you fully informed so you can better understand what is happening, why, and what you can do to mitigate the impact on your insurance program. The insurance industry is in the midst of a correction that largely began in California a few years ago and continues to spread across the country, particularly to regions most susceptible to wildfires, hurricanes, and other catastrophic climate events. Despite this, Americans continue to move into these areas, and that has put a serious strain on insurance carriers, which, in turn, is increasingly impacting even less-vulnerable areas. In the past five years, the U.S. has experienced 89 weather-related events that caused at least $1 billion in damage, and that trend is not abating. In 2022 there were 18 separate billion-dollar events making it the third most costly year on record for hurricanes, freezes, severe storms, wildfires, and floods. Floods, in fact, are the country’s most frequent and costliest natural disaster, now occurring often in areas not previously considered to be high-hazard ones. All of which means premiums continue to climb higher, non-renewals are more common than ever, and it is increasingly difficult to obtain coverage, wherever you live across the country. This is no doubt, frustrating news to clients but does have a silver lining: Several years of navigating this market has made our team extremely well equipped to guide you through its challenges and find creative solutions best fit for your unique needs. Three factors driving the market correction Insurance carriers engage in a constant struggle to sustain an economic model that allows them to pay the broadest number of claims. This moment in time remains a particularly tricky one for them because … 1. Capacity is low. Today’s carriers are significantly overexposed after decades of securing increasingly expensive homes in areas that have borne catastrophic losses from weather events. Even premiums that may seem unreasonably high to individual policyholders do not sufficiently cover carriers’ aggregate risk. Not only has this overexposure made carriers tighter with rates, but it has also made them more likely to refuse coverage altogether. This is the case in affected and unaffected areas alike, especially for owners of older homes that are not fitted with the latest protections or do not meet current building codes. A similar reluctance is occurring in areas like New York City, where aging infrastructure makes carriers wary. 2. Reinsurance costs are high. If carriers were left to pay off losses solely with the money they took in from premiums, insurance would be unsustainably expensive. That’s why they support their own exposure with reinsurance, essentially, coverage for losses they can’t cover on their own. Reinsurance guarantees carriers have enough cash no matter the cost of a loss. That said, the current combination of increased catastrophic events and heavier concentrations of multi-million-dollar homes in vulnerable areas impacts both insurance and reinsurance carriers. In fact, so drastically, reinsurance is now much costlier than before. When those rates rise, it makes it that much more complicated and expensive for carriers to provide adequate coverage for clients. There comes a tipping point when reinsurance becomes just too costly, especially government-regulated ones that are required to carry a certain surplus. 3. Inflation is making everything worse. The cost of replacing almost everything is significantly higher these days. Labor and materials are at sky-high prices because of ongoing supply-chain issues and skilled-worker shortages. Vehicle repair costs, to take one example, have risen steadily, and faster, in the past two years. The latest premium appliances may be more technologically advanced, but that also makes them more expensive. Much more basic materials such as paint, lumber, roofing and plumbing are pricier, too. And these costs continue to climb higher after a catastrophic event which puts pressure on available resources. Smart risk management strategies We continue to provide innovative solutions to help protect you and your belongings. But we also want to put you in the best possible position to ride out these challenging times. Specifically, we recommend that you… Do everything in your power to avoid a loss. Yes, accidents and climate events will unfortunately happen, but you can better prepare your home and property for both. Simple pre-emptive steps such as creating a brush-clearance zone in a wildfire-prone area or undergoing a windstorm mitigation inspection in storm-heavy areas are crucial. We can also help you schedule walk-throughs with professionals, who will spot potential trouble areas and recommend preventative measures. Likewise, we encourage you to embrace the available technology to minimize the likelihood of water loss or wind damage such as water leak detection devices and more. Protect your insurance coverage. A history of previous claims, even a short one, is often a strong predictor of premium hikes and non-renewals. It can also make it more difficult to secure new coverage. Thus, we encourage you to speak with your insurance professional prior to making any potential claim, so we can help you decide how best to proceed. (In some cases, that means taking on the expense yourself if possible.) Choose coverage strategically. If, as we suggest, you plan to file claims only in the most onerous scenarios, you can lower premiums by choosing higher deductibles. Other situations may call for you to self-insure or partially insure. For example, if your home has the best-possible wind protection and you do not carry a mortgage, foregoing wind coverage to make the premiums more reasonable might be a viable option. Contact us before signing a contract on a home: If you are considering buying in a risky geographic area, your broker can tell you if you will be able to purchase coverage—and whether the cost will be prohibitive. We understand that this is an extremely challenging market, but we are confident that we can help guide you to make it more manageable. If you have any questions about the current state of the market or whether your personal portfolio is adequately protected, please know we are always here to help guide you and your family.   ...

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Filing an insurance claim in today’s evolving market

As we continue to navigate this unprecedented insurance landscape alongside you, our consultative approach to handling your potential claim is more important than ever. With insurance carriers continuing to raise premiums or, worse, decline renewals of long-standing policies, we want you to better understand the broader shift around filing even the smallest claims, which can help safeguard your long-term insurability. As such, our recommendation is that you call us first to discuss any loss or possible claim. To state it as clearly as possible, we never want you to file a claim directly with your insurance carrier before speaking with your personal account executive or with our dedicated, 24/7 claims team (800-221-5830). As your risk management advisors, we will look holistically at your insurance program and offer guidance as to what we think is the best approach for your specific situation, and given the market, so that you can make the most informed decision. This discussion will also allow us to best support your choice and advocate on your behalf. To help you prepare for such a conversation, we have outlined the six key considerations we would explore together before you decide whether to file a claim: 1. Was the loss caused by a catastrophic event? When the answer is yes, our team will most likely advise you to file a claim. The industry codes for catastrophic events like wildfires, floods, major storms, and earthquakes, which allows carriers to isolate related losses and means they will likely not hold that claim against you when it comes time to renew your policy. 2. Was a third party involved? If someone is injured or another person’s property is damaged, we will most likely recommend that you file a claim to ensure your assets are protected. With that in mind, we encourage you not to pull out your checkbook at the scene of a crash in the hope of avoiding an insurance claim, nor should you ever volunteer to cover someone’s losses before consulting our claims team or your account executive. 3. If no catastrophic event or third party was involved, what is your tolerance for paying out of pocket? Our claims experts have begun to ask how much clients are willing to cover themselves. If the cost of replacing whatever you lost falls within this amount, they then generally suggest you do not file a claim. 4. How will filing this claim impact your risk management strategy going forward? Someone who files too many run-of-the-mill claims risks being deemed by insurance carriers as “no longer profitable.” In the end, carriers are businesses that need to earn money to ensure that they can pay out claims while being financially successful, and that has become increasingly difficult to achieve as weather-related events have increased in frequency and severity as well as costs of replacement and reinsurance have risen. Additionally, construction (material and labor) and auto repair costs continue to increase. So, when it comes time to renew, they are paying more attention to claims histories, especially for water damage and auto accidents. That’s all the more reason we might recommend you handle whatever you can on your own, thus preserving your insurance for catastrophic losses. 5. Is there any reason for you to choose not to file this claim? No doubt it is frustrating to pay for insurance and then choose not to use it for a covered claim. However, after our discussion, you may decide that it’s not worth filing the claim as it could impact your future insurability and once you lose coverage it is very hard and expensive to get it back. If that’s the case, we will recommend other adjustments that may help lower your premiums, such as increasing deductibles or assessing exposures and coverage to make sure you are paying only for what you need. 6. Can we help you be even more proactive about preventing future losses? As you no doubt know, an ounce of prevention can save you thousands in repairs. This is why we regularly educate our client’s around proper maintenance. It’s crucial for you or your caretaker to do things like caulk around windows, clear drains and gutters of debris and check that the sump pump is operational. Taking the time to walk around your home and find the spots where a small investment will prevent a loss that in turn will save you money and effort in the future. And we are happy to provide further guidance and best practices if there is anything we can do to help in this process. Our primary goal is always to protect you and your family's long-term interests. This is why we will work together to guide and advocate for you throughout the claims process. And it’s why we hope your first step will be a call to our team and not the carrier. We can advise on the steps required to handle your immediate loss and keep you insured long-term, as we have done for clients for more than a century. ...

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Woman looking pensive out over the ocean | Alliant Private Client

Alliant's leaders discuss the unprecedented insurance market

The insurance market is going through significant changes, many of which we have mentioned before: more difficulty in securing insurance, higher premiums nationwide, even non-renewals. But the situation continues to evolve, and there are early signs that the market will stabilize. To give you a clearer idea of where things stand and what the future may hold, two members of our leadership team share their thoughts. Is the current market as tough as everyone says?   Cindy Zobian, EVP, Managing Director: Simply put, we have never seen market conditions like these before. In essence, it’s a capacity issue: the rate of natural disasters—and the damage caused by them—have increased exponentially while home values and rebuilding costs have gone sky high. Mark Recht, SVP: Case in point: we just got another announcement from a carrier about adjustments caused by inflation. Unfortunately, higher premiums and insurance challenges aren’t just happening to property owners in areas prone to most natural disasters, such as California and Florida. Those are countrywide phenomena. There is currently a cloud casted over the market. CZ: That said, we can see glimmers of light at the end of the tunnel! Well, that’s hopeful. What makes you optimistic about the future?   MR: We saw a similar market a while back in Florida after Hurricane Andrew, but within a few years, things had shifted for the better. Homeowners learned to incorporate new and better risk-mitigation methods, the government placed stricter building codes, technology helped us to map the riskiest areas, and we incorporated more flexibility into insurance programs. Together, that all worked to stabilize the situation. As for the current moment, Cindy and I just met with reinsurers [Note: As a reminder, reinsurers assume a portion of carriers’ risks] and they told us they are in the process of figuring out how to add more capacity. If they can take on more risk, carriers will be able to as well. CZ: We have seen many insurance trends over the years, but, ultimately, they come down to finding a middle ground in the marketplace. That’s what the industry is striving for again today. I’m not saying the problems will be solved in a year, but our decades in the business have us hopeful that things will get easier eventually. At the same time, I don’t think insurance is going to be a buyer’s market again. What is Alliant Private Client doing to help policyholders in this market?   CZ: We are being proactive. We don’t wait to get non-renewal notices or other surprises. Our team is constantly on the lookout for unexpected solutions to lost coverage. MR: For instance, clients are becoming more comfortable with unregulated solutions, so that has allowed us to be more creative in our use of non-admitted options. And without being arrogant, the fact that we are one of the largest brokers in the country gives us significant clout among carriers who have begun to prioritize trading partners. We are also working more with different organizations, and sometimes even direct writers, to be able to offer solutions that make things easier for our clients. And what can clients do to make things easier on themselves?   MR: First and foremost, they need to recognize that it really is no longer a buyer’s market. These days, the priority is finding a suitable solution; pricing is secondary. Also, they should consider consolidating insurance solutions under one broker because carriers may, for example, be willing to take on your multi-million-dollar house in California’s brush territory if they are also insuring your less-expensive ranch in Idaho. You lose that benefit if you are dealing with multiple brokers. CZ: Also, when you get a bill, pay it on time. If you let your policy lapse, you might not be able to get it back. And be really thoughtful about making claims. Putting through even a $50,000 claim might hurt your premiums and renewal prospects. Be sure to discuss every potential claim with your broker first. Then they will help guide you on whether or not it’s in your best interest to put forth that claim. MR: And whenever you receive notice of a critical requirement—be it to trim brush or put in vents—follow through. Maybe you could ignore these in the past, but not anymore. Today, failure to comply might result in a policy cancellation. CZ: And lastly, of course, our clients should know that we are always here to help with questions and concerns about their risk management strategy. ...

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Couple gazing out large sliding glass door at harbor | Alliant Private Client

Market update: why premiums and nonrenewals are rising

The insurance industry is in the midst of a correction due to a significant increase in catastrophic events such as hurricanes, wildfires, floods, and more. This has resulted in some clients facing challenges, ranging from higher rate hikes to non-renewals. Whether you have been directly affected or not, we want to educate you on the current market situation. To help you better understand what is happening, why it’s happening, and how you can mitigate its impact on your insurance program, we convened a group of senior leaders to answer frequently asked questions. However, before we go into the details, let’s take a step back and talk about insurance more broadly. Essentially, the market only functions because risks are pooled, and thus transferable. To cover one person’s home (or automobile or boat, etc.), carriers need to receive premiums from all their clients in an amount sufficient to offset their total exposure. The downside: Your rates are not just affected by your personal claim experience, but also by all those in the pool with you. Insurance can’t work if rates are only raised for people who’ve made claims. So even if you have a clean record with no claims, you could experience a renewal where your rates go up because you are in an area that overall has had large losses. The upside: While the ‘pooling’ of risk means you will be impacted by other people’s losses, it also means that in the event you have a major loss, you will likely be paid an amount that greatly supersedes the amount you’ve paid in premium over time. Say you pay an annual premium of $16,000 over the course of 20 years, then in year 21 lose a house that is insured for $4 million due to a fire, you have still come out ahead. Alright, now to the FAQs... Why is the market in this current state? Although it may feel personal, the market conditions are not a direct affront to individuals. Instead, two main factors are driving the changes. First and foremost, extreme weather events have been increasing across many parts of the country. Examples include the rising number of wildfires in the West, which have doubled in the past few decades. While California and the Gulf Coast are particularly affected, the Northeast and Midwest have also experienced their share of challenges. At the same time, major cities nationwide are also struggling with the effects of an increasingly crumbling infrastructure. Aging pipes in urban buildings have led to more costly water damage claims. For example, one of our carriers has paid nearly double this decade in water losses, and the number one reason is plumbing failures. Furthermore, the rising costs of repairs and reconstruction have compounded the challenges. The demand for skilled labor in the rebuilding process now surpasses supply, and replacing high-end appliances and amenities comes at a steep price. It’s important to note that suitable temporary living arrangements during such times are also costly. Ok, so how will this affect my premiums? Where once we considered anything more than 10% on the high side, we now regularly see jumps of 20%-25% a year. We encourage you to contact your Account Executive regarding your specific program and how your premiums may or may not be affected. Does the new reality impact me if I don't live in an at-risk area? Its possible. Keep in mind, while you may live in an area less prone to catastrophic events, that doesn’t mean you are exempt from severe losses. Hailstorms in Wyoming, tornadoes in Texas and severe winter storms along the East, have all been areas with damaging losses over the past few years. Therefore, no area is truly immune to loss. Even if one area within a region is not at risk of catastrophic loss, there may still be a raise in rates within that state. For example, premiums may go up on a townhouse in San Francisco because of wildfires in L.A. County. The reality is, the impact of these trends is nationwide. So, it is important to speak with your insurance broker as some markets are increasing their thresholds in certain areas and others are not writing any new business. Is there any relief in sight? It depends largely on science. If major weather incidents and the ensuing catastrophic losses continue or increase, carriers will then need to continue to adjust their exposure and rates accordingly. What can I do to help myself? To keep your premiums as low as possible, and your coverage intact, make your account look as appealing as possible to underwriters. That means sustaining small losses, utilizing higher deductibles and keeping your insurance available for catastrophic, worst-case events. This will also provide premium savings. For example, data suggests that properties with one water loss will likely realize another one soon—particularly in apartment buildings. If you put in a claim for a small water loss, you may be a riskier proposition to carriers. Therefore, taking care of small claims, could work in your favor when your policy comes up for renewal. We also encourage you to comply with all the recommendations suggested by your insurance carrier and to pay your premiums on time. Brokers can no longer guarantee reinstatement if you cancel for non-pay. Also, take the time to contact your broker and review all of your coverages. When acquiring new items or properties make sure you reach out to them to ensure you have the proper protection. If you still haven’t told them that you purchased a new car for your son months ago or you started investing in a wine collection – you should place a quick call and confirm coverage has been issued accordingly. Lastly, if you live in areas with serious weather concerns and have experienced a non-renewal or a drastic rate increase, ask your broker about secondary markets. They’re not ideal, and coverage terms may not be as broad as your existing policy, but they’re better than nothing. Anything else I should know right now? If you plan to follow our advice and only put in claims for major losses, select policies with high deductibles. You can also get breaks on premiums by complying with any safety measures prescribed by your carrier. Even if you don’t think you need a leak detector or backup generator, putting one in anyway will maximize the credits. Hey, whatever it takes! Always know we are here to guide you through this correction and any other insurance concerns as well. ...

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